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Debt Recovery Tribunal And Who Can Benefit From It

By Author: Lahiri Associates
Total Articles: 10

Debt Recovery Tribunal (DRT) are the judicial body that handles the cases pertaining to debt recovery concerning banks and other institutions dealing with finances. In simpler terms, banks can approach the DRT for recovering defaulting loans from customers. The institution was established in 1993 after the law for Recovery of Debts was passed. The tribunal can take preside cases from bank for loan disputes ranging over 10 lakhs. Currently there are over 30 Debt Recovery Tribunals establioshed all over to country to facilitate financial institutions in the recovery of the defaulter loans.
According to Debts recovery tribunal lawyer, the main difference between ordinary court procedure and DRT is that the later one is able to resolve the cases in a much quicker rate. Although the questions regarding the loan recovery remain a little dicey, however the institution can pass out verdicts in a much quicker rate. In current times, an amendment was passed to chunk out the flaws of the institution.
Main features of Debt Recovery Tribunal:
• The financial institutions can address their cases to the DRTs for loan amounts greater or equal to Rs. 10,00,000. For loan amount lesser than 10,00,000; the financial institutions would have to go to the civil court.
• Only financial institutions or banks can approach the Debt Recovery Tribunals for loan recovery cases. Under financial institutions categories, agencies like Public Financial Institution or Reconstruction or Securitization Company, aree also included.
• The cases pertaining to loan recovery can only be filled to the DRTs. Cases related other civil maters will not be entertained by the institution.
• The summary procedure is followed by the institution and the cross examination of evidences are allowed only in special circumstances.
• The section 22 of the Debt Recovery Tribunal act sets asides the institution of civil proceedings. The tribunal has to follow the code of natural justice.
How the recovery process is conducted?
Initially, a bank or the financial institution submits an application to the tribunal for the loan recovery. Next the DRT conducts an trial on the accused and verifies the claims put forward by both the banks and the debtors. Mostly, the debtors are big financial institutions who have defaulted on the loans. The tribunal settles the cases quickly, to avoid further financial losses to the financial institutions.
The DRT act makes it mandatory for the tribunal to address the cases put forward by banks or other financial institutions quickly. Mostly the assigned time for addressing the appeal put forwards by the banks is maximum 6 months from the date the appeal was submitted. However, recently few of the amendments were introduced to make the Debt Recovery Tribunal more effective in addressing the issue.
With the help of Debt Recovery Tribunals, financial institutions are more secure in giving out loans to big corporate houses and industries.

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